NAB plugs into better technology infrastructure to serve customers

National Australia Bank expects less risk of outages in its technology infrastructure after moving to a new data centre that plays a critical behind-the-scenes role in $250 billion in transactions daily.

NAB group executive Renee Roberts said the bank was also poised to ramp up spending on customer-facing technology, such as banking apps, after upgrades to back-end systems.

All of the $250 billion a day in bank transactions pass through the data centre in Melbourne.

NAB last month decommissioned its decades-old data centre in East Melbourne, which was built on the site of an old petrol station in the 1970s when facilities needed to be close to the city.

A data centre is a like a technological backbone for a bank; every transaction will flow through these servers.

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The closure is the final chapter in NAB's move to a new centre in a western Melbourne suburb, Deer Park; a facility made up of rows of whirring machines and flashing lights of servers. It was opened in 2013.

Banks are being forced to upgrade their sometimes creaking infrastructure to handle surging numbers of transactions thanks to mobile banking and a boom in contactless payments for low-value purchases, such as cups of coffee.

Ms Roberts, group executive for enterprise services and transformation, said a feature of the new centre was its ability to provide "infrastructure on demand."

By purchasing the server capacity from a third party, the bank pays for the capacity it needs at peak times, rather than running the risk of servers reaching overcapacity, which can – as Ms Roberts explains – cause them to "splutter and fall over".

Such outages are a key concern for banks that increasingly compete for customers on the strength of their digital service.

"It deals with quiet times when applications aren't needing a lot of work and then it also deals with peak times," Ms Roberts said.

For instance, internet banking is used heavily at lunchtime but much less in the middle of the night. In contrast, mass payments between banks are often made overnight, so the peak in demand for server capacity can be the early hours of the day.

The new facility, which is the bank's back-up data centre but still has a role in every transaction across the network, is running at 30 per cent capacity.

"The infrastructure-on-demand piece means that there is just more reliability and less risk of outages due to running out of capacity," Ms Roberts said.

NAB has also started to see benefits from its overhaul of the core banking system, which deals with customer management. Known as "NextGen", the project was dogged by delays and cost blow-outs. However, it has recently started to deliver benefits such as shorter loan processing times.

As a result, Ms Roberts said the bank would put more financial resources and staff into changes such as "refreshing" the applications customers actually saw.

"We've landed it, we're on the other side and we're now able to focus on the good stuff," Ms Roberts said.